Better apple growing season

04:11, Dec 14 2012

Nelson apple growers are in better heart after a roller-coaster selling season which saw many break even or return a small surplus for the first time in four years.

But they had to endure plenty of ups and downs in 2011-12 to get there.

Initial forecasts suggested they were in for another season from hell following a poor growing season which produced a surfeit of small fruit and an export crop down a third.

However, this dissolved when bad weather in the United States and Chile hit crops, causing a global shortage. This pushed up prices in all major markets, only for the high New Zealand dollar to wipe out most of the gains.

There was a disappointing end to the season as austerity in Europe, discounting in an oversupplied British market and competition from cheaper southern hemisphere fruit in Asia and the US took its toll.

But with the global shortage expected to last for another season, Nelson orchardists hope a kinder growing season will help them produce bigger crops so they can continue their fragile recovery after three consecutive years of losses.

Motueka Fruitgrowers Association chairman Simon Easton  said there was still a long way to go but the indications were that market prices would again be strong, although the New Zealand dollar had strengthened against the US,  euro and British currencies.

Despite breaking even or making a modest surplus this year, many growers remained in a vulnerable financial position, he said.

''They may be able to pay a tiny amount of debt back to the bank, but there is no money for capital expenditure, but we live to fight another day.''  

He said returns from the region's two main varieties  - braeburn and royal gala - averaged around $20 to $22 per carton, just above the cost of  production.

An overdue turnaround in the fortunes of jazz had been a welcome boost, with those growing good sized fruit getting $22-$25 a carton, $4 more than last year.

This snapped several years of punishing losses for growers who had invested heavily in converting to the Enza variety, he said.

The marketer had benefited from lower exports to Europe and foreign exchange cover, but had also reduced its in-market costs and commission payments, Mr Easton said.

''Hopefully it is a sign of things to come and we have turned the corner with jazz.''

New licensed varieties such as envy, sonya and koru had also performed well, returning $30 a carton plus, while fuji and pink lady had earned up to $25 a carton.

Heartland Fruit chairman John McCliskie said while the season had finished up better than last year, ''growers won't be rushing out to buy new cars''.

Exchange rate movements and higher costs had eaten away most of the gains from higher market prices, he said.

Late season discounting by retailers had made it a ''tough slog'' for braeburn in Britain, and austerity programmes in Europe had affected all export produce, including apples.

''Consumers are loath to spend money on what they regard as high-priced food items when there are cheaper ones available.''
The US market had remained strong for much of the year, with fruit fetching $40 a carton, but a lack of big sized apples meant the volumes shipped were well down, limiting the gains, he said.

Asia was a ''mixed bag'', with returns from Taiwan hit by competition from US and Chile apples. New varieties had done well but the smaller size of royal galas had affected prices, Mr McCliskie said.

Veteran Redwood Valley orchardist Bill Lynch - who heads a Mahana group - said he detected a mood of ''relief and mild optimism'' among growers.

''It looked like we were headed for a slash-the-wrist season at the start until the global shortage of fruit loomed.

''I think most growers have traded above the bottom line and the banks seem to be better disposed towards the apple industry which has got through a pretty adverse financial climate.''

Mr Lynch said the considerable investment - up to $60,000 a hectare - many had made in converting to new varieties and growing systems was finally starting to pay off.

''It's been such a bottleneck...we are hoping we are just getting through it and get some real returns.''

Such a move was vital because when the fruit shortage ended commodity varieties like braeburn and royal gala would come under renewed pressure, particularly in Europe where economic conditions were likely to remain tough for some years, he said.

There was much more to be made from new varieties protected by intellectual property agreements where the amount of fruit sent to the market could be closely controlled.

However, the key to high returns remained the kiwi and many growers could not understand why the Government did not require the Reserve Bank governor to consider export values when setting the official cash rate, Mr Lynch said.

A lower OCR would make the dollar less attractive to investors and help stimulate an economic recovery.

''This region would be fair humming if the dollar was adjusted back to relativity. The wealth gain to Nelson would be enormous.
''It seems to me to be a no-brainer.''

 Meanwhile, Mr Lynch said he held out little hope that a recent review of the Horticulture Export Authority Act would be of much benefit to the pipfruit industry.

The act enables horticulture industries to voluntarily and jointly fund activities that support exporting, including marketing, promotion and quality assurance.

While it is popular with small export-based industries, the Government wants to make it more useful and efficient and possibly reduce compliance costs.

It has sought feedback on four key areas - enabling different markets to have different programmes, clarifying entry and exit procedures, questioning whether licence application assessment criteria are adequate, and questioning whether enforcement and penalty provisions are adequate.

Pipfruit growers supported using  the HEA to enter the Australian market only for exporters to block the move, in a contentious industry vote last year.

Mr Lynch said the HEA suited emerging industries better when what the pipfruit sector needed was some control over crop volumes and values.

The pipfruit industry was ''seriously overdue'' for a thorough review by its new leadership, he said.

''No-one really wants to carry on like we are but we don't know what we want.''

Growers needed to be surveyed about what kind of model they wanted, including whether exporters should be licensed and adhere to agreed industry standards, he said.

Mr Easton said the HEA legislation needed strengthening, as it lacked teeth and could do ''sweet f-all''.